Hindustan Lever Limited

INDIA”S LARGEST FMCG MARKETER

MISSION
To add vitality to life and to meet everyday needs for nutrition, hygiene and personal care with brands that help people feel good, look good and get more out of life

OUTLINE
1. HERITAGE: PAST MILESTONE 3. HERITAGE: PRESENT STATURE 5. ORGANIZATION 7. BUSINESS AND BRANDS 9. CITIZEN LEVER 11.FINANCIAL ASPECTS 13.LOOKING AHEAD

1. HERITAGE: PAST MILESTONE
Formed in 1956 with merger of Hindustan Vanaspati Manufacturing Company, Lever Brothers India Limited and United Traders Limited First foreign subsidiary to offer 10% equity to Indian public Unilever approves research activity by HLL in 1957 HLL research centre opens in Mumbai in 1967

Liberalization in 1991, HLL allowed to explore every product and segment, no constraint on production capacity Recognized as Star Trading House in exports by Government Of India in 1992 Tata Oil Mills (TOMCO) merges with HLL in 1993-the biggest in Indian industry till that time HLL forms NLL ( Nepal Lever Limited)

HLL and US based Kimberley Clark Corporation form 50:50 JV in 1994 Acquisition of Kwality and Milkfood and introduction of Wall’s in 1994 50:50 JV with Indian cosmetics major- Lakme Limited : Lakme Lever Limited formed in 1995 Recognized as Super Star Trading House in 1995 Brooke Bond Lipton India Limited merges with HLL in 1996

HLL introduces branded atta, Surf Excel launched Merger of Ponds India Limited with HLL in 1998 due to overlaps in Personal products, Chemicals and Export business Implementation of Direct consumer contact called Project Bharti Acquisition of 74% stake in Modern Food Industries Limited in 2000 Enters Ayurvedic health and Beauty care category with the Ayush Therapy Centres in 2002

Launch of Hindustan Lever Network (HLN) in 2003 Acquisition of Amalgam Group ( leader in value added Marine Products exports) Launch of Pureit water purifier in 2005

2. HERITAGE:PRESENT STATURE
HLL is India's largest FMCG company Unilever ,the parent company has 51.55% equity holding, 380000 individual shareholders and financial institutions 20 distinct categories in Home and Personal care products and Food and Beverages Scale of combined volume of 4 mn tonnes and sales of more than 13000 crore

One of the largest exporters Recognized as Golden Super Star trading House by Government Of India About 16000 employees , including 1200 managers HLL brands are manufactured over 80 factories across India Outsourcing from 150 other units

Operations involve more than 2000 suppliers and associates Distribution channel comprises about 7000 redistribution stockists, covering 6.3 million retail outlets It covers the entire urban and about 250 million rural consumers Regular responsiveness for natural calamities- earthquake in Gujarat , tsunami

More than 380 patents demonstrating its leading role in Consumer relevant R&D Largest player in hot beverages out of home segment with more than 15000 tea and coffee vending points

3. ORGANIZATION
MANAGEMANT STRUCTURE - BOARD
- DIVISIONS - CENTRAL FUNCTIONS

BOARD : APEX BODY
Headed by the Chairman and comprising 5 whole time directors and 5 independent non-executive Directors Operations supervised by National Management comprising the Vice Chairman, MD (HPC), MD (Foods) and the Finance Director

BOARD OF DIRECTORS
CHAIRMAN : Mr. Harish Manwani CEO and Managing Director: Mr. Douglas Baillie VICE CHAIRMAN: Mr. M. K. Sharma Managing Director( Foods): Mr. S. Rabindranath

Finance and IT Director: Mr. D. Sundaram Executive Director: Mr. Nitin Paranjpe DIRECTOR: - Mr. Sanjiv Kakkar - Mr. A. Narayan

- Mr. V. Narayanan - Mr. D.S. Parekh - Mr. C.K.Prahlad - Mr. S. Ramadorai

DIVISION

HOME AND PERSONAL CARE

FOODS

The divisions are further reorganized into categories Each category and each function – Sales, Commercial, Manufacturing is headed by the Vice President Division’s management committee comprises of Vice President and Managing Director Regional Sales Manager and Area Sales Manager head the regional branches in Delhi, Kolkata, Chennai and Mumbai for managing Sales operations

Marketing Manager heads a team of brand managers for each Category in Marketing Commercial team of a division is responsible for Supply Chain Management Each division has a nationwide manufacturing base Each factory headed by teams of Production, Engineering, Quality Assurance, Commercial and Personnel managers

CENTRAL FUNCTIONS
- Finance - Human Resources - Technology - Research - Information technology - Legal and Secretarial - Corporate Affairs

4. BUSINESS AND BRANDS
A. Home and Personal care C. Foods E. New Ventures G.Exports

A. HOME AND PERSONAL CARE

PERSONAL WASH

FABRIC WASH

ORAL CARE

SKIN CARE

HAIR CARE

DEODRANTS AND TALCS

COLOUR COSMETICS

AYURVEDIC PERSONAL AND HEALTH CARE

B. FOODS

TEA

COFFEE

ICE CREAM

OTHER FOODS OTHER CULINARY PRODUCTS

C. NEW VENTURE

- HINDUSTAN LEVER NTEWORK - AYUSH AYURVEDIC PRODUCTS AND SERVICES - PUREIT WATER PURIFIER

Direct selling arm of HLL Multi category business opportunity started in 2003 in the area of Network marketing Having 3.5 lakh consultants trained by expert managers Offers opportunity to build a business with different categories of HPC and Food products Products exclusive to HLN, unavailable in retail channel

Spread to 1500 towns/cities , backed by 42 offices and more than 250 service centres Requires lowest investment for entry Widest reach among direct selling companies in India Highly affordable prices Focused training system and tools to aid self development

RANGE OF PRODUCTS
HOME AND PERSONAL CARE - Detergents ( Lever Home) - Home Cleaning ( Lever Home) - Personal care and cosmetics for women ( Aviance) - Soaps ( Ayush Spa range, Aviance and Denim Xclusive)

- Health care ( Ayush Spa) - Male Grooming ( Denim Xclusive) - Kids care ( Little Animalz) - Oral care ( Mentadent)

FOOD - Children’s nutrition ( Ayush Poshak Rasayana) - Ready-to-cook rice meals ( Indus Valley)

Most advanced purifier, no electricity or tap water supply needed Meets the germ kill criteria for toughest regulatory agency in the US - The Environment Protection Agency (EPA) Devoted work for 5 years by Indian and international experts

D. EXPORTS

Taken up in 1962 due to foreign exchange shortage Largest exporter of branded FMCG Sourcing base for Unilever brands in HPC and Tea for supplies to other Unilever companies Preferred supplier to clients in categories in which India has Competitive advantage: Marine Products, Castor and Rice

Enjoys international recognition Geography comprises countries in Asia, Africa, Australia, North America and Europe Accounts for 12% of the turnover

EXPORT PORTFOLIO
HOME AND PERSONAL CARE - PRODUCTS Soaps, Skin care, Oral care - BRANDS Lux, Lifebuoy, Pears, Fair & lovely, Dove, Vaseline, Close-Up, Pepsodent, Signal HLL is the only source of Pears soap across the world

BEVERAGES - PRODUCTS Branded packet Tea , Instant Tea - BRANDS Brooke Bond, Brooke Bond Red Label, Brooke Bond Taj Mahal, Lipton, Lipton Yellow Label, Lipton Green Label, Lipton Brisk, Lipton 3-in-1 primex, Chinese Rickshaw

MARINE PRODUCTS - PRODUCTS Surimi, Crabsticks, Shrimps - BRANDS Ocean Diamond, Ocean Excellence, Shogun, Hima, Gold Seal Tara, Prima Icelandic, world’s third largest seafood company, is one of the customers

RICE - PRODUCTS Basmati Rice, Basmati Rice-based ready-to-eat Rice meals - BRANDS Gold Seal Indus alley, Rozana, Annapurna CASTOR - PRODUCTS Castor Oil, Castor Oil based, Specialty Castor Oils - BRANDS Topsol

5. CITIZEN LEVER
CORPORATE SOCIAL RESPONSIBILITY
Commitment to all stake holders – Consumers, Employees, Environment and the Society that the Organization operates in

SNAPSHOT
Focused on Import Substitution in 1950 when BOP was an issue Most of the Investment in designated backward areas and zero industry districts in 1980’s , reviving sick industries, developing local entrepreneurship Focusing on health and hygiene, women empowerment Shakti Lifebuoy Swasthya Chetna Fair and Lovely foundation

Community support activities like education and rehabilitation of special or underprivileged children, care for the destitute and others Happy Homes Yashodadham TERI-CSR special award from The Energy and Resource Institute for commitment to every aspect of Sustainable Development Environment Management Practices Greening Barrens Trust, Transparency, Accountability and Responsibility in dealings with Employees and Shareholders

CHANGING LIVES IN RURAL INDIA Seeks to empower underprivileged rural women by providing income generating opportunities Started in 2001 and extended to about 1 lakh villages in 15 states Targets villages with population of less than 2000 people Health and hygiene education through Shakti-Vani programme (social communication programme)

Access to relevant information through iShakti community portal (information related to agriculture, health, vocational training, animal husbandry) Has about 30000 women entrepreneurs in its fold Covers about 15 million rural population

HEALTH AND HYGIENE EDUCATION Initiated in 2002 in media dark villages (UP, MP, Bihar, WB, Orissa, Maharashtra) Spreading awareness about the importance of washing hands with soap Reached 27000 villages and 80 million people Initiated due to presence of diseases such as Diarrhoea

It is a multi-phased activity Effects behaviour change through demonstration by means of pictorial story, quizzes etc. Targets children and mother

ECONOMIC EMPOWERMENT OF WOMEN Launched in 2003 Provides information, resources, inputs and support in the areas of education, career and enterprise Targets women from low income groups in rural as well as urban India Renowned Indian women, physicians , activists are members of the foundation

Career guidance is provided by organizing career fairs About 5 lakh students have benefited from 150 towns and cities, getting acquainted with over 200 career options Scholarships are provided Vocational training in areas of embroidery, garment designing etc.

SPECIAL EDUCATION AND REHABILITATION Initiated in 1976, with the setting up of Asha Daan-home for abandoned, challenged children and the destitute Needs are met through special classes of basic skills, physiotherapy and corrective surgery Takes care of over 300 infants and HIV-positive patients Opened schools for challenged children helping them become self reliant

REBUILDING LIVES Is a village reconstructed in Gujarat which was wrecked by earthquake in 2001 Comprises 289 homes with over 1100 residents Provision of school building, playground and a multi purpose Community centre

ENVIRONMENT POLICY

Maintaining environment management systems across the company to meet statutory requirement Assessing environmental impact and setting annual improvement objectives Appropriate training to employees Co-operation with suppliers, co-packers, external bodies and government

Formal review of environment performance at every HLL site Nomination of HLL environment coordinator Responsibility for environment management at each unit will rest with the unit head Heads of departments are responsible for environmental performance at department levels

Formal risk assessment exercise undertaken at product development stage Development of treatment technique for any wastes generated as a result of new product Development of technology to use non conventional forest seed oils for soap making

WATER CONSERVATION AND HARVESTING Initiated to conserve and regenerate the scarce water resource To reduce water consumption in its operations- HLL has reduced ground water consumption by 50% Regenerate sub-soil water tables through the principles of 5R - Reduce, Reuse, Recycle, Recover, Renew Help villages to implement models of watershed development

70% of HLL sites are now zero discharge sites Energy consumption per unit of production has come down by 61% since 1996 Since 2003, all sites have begun to harvest rain water

6. FINANCIAL ASPECTS
BROAD OUTLOOK SALES AND RESULTS FOR 2006 2006 HIGHLIGHTS DIVISION WISE GROWTH IN 2006 SUMMARY - 2006 SALES SUMMARY FOR MQ-07 RESULTS SUMMARY FOR MQ-07 MQ-07 HIGHLIGHTS CATEGORY WISE SALES GROWTH: MQ-07 MARKET SHARE PERFORMANCE

BROAD OUTLOOK

SALES TREND FOR PAST 10 YEARS
14000 13000 12000 11000 10000 9000 8000 7000 6000
19 97 Y 19 98 Y 19 99 Y 20 00 Y 20 01 Y 20 02 Y 20 03 Y 20 04 Y 20 05 Y 20 06 Y

SALES ( in Rs. Cr)

YEAR

Continuously rising sales apart from a dip in 2002 Sharp increase in the past three years

NET PROFIT TREND FOR THE PAST 10 YEARS
2000 PAT ( Rs. Cr) 1500 1000 500 0
19 97 Y 19 98 Y 19 99 Y 20 00 Y 20 01 Y 20 02 Y 20 03 Y 20 04 Y 20 05 Y 20 06 Y

YEAR

Rising profit apart from a dip in 2004 Constant absolute increase for major part of the decade

EXPORT TREND FOR PAST 10 YEARS
EXPORTS (in Rs. Cr) 2500 2000 1500 1000 500 0
19 97 Y 19 98 Y 19 99 Y 20 00 Y 20 01 Y 20 02 Y 20 03 Y 20 04 Y 20 05 Y 20 06 Y

YEAR

Rising initially, stable since 2002

HLL SHARE PRICE ON BSE FOR THE PAST TEN YEARS
Rs. per Share of Re. 1 250 200 150 100 50 0
19 97 Y 19 98 Y 20 03 Y 20 04 Y 20 05 Y 20 06 Y 19 99 Y 20 00 Y 20 01 Y 20 02 Y

YEAR

Rising sharply after a plunge in 2004

SALES AND RESULTS FOR 2006

NET PROFIT INDICATORS PAT PBT PBIT SALES 0

1408 1855 1355 1540 1604 1862 1471 1709 11061 12103

2005 2006

5000

10000

15000

Rs. Crore

2006 HIGHLIGHTS

Sustained top line growth (+9.4%) on the back of a 11% growth in 2005 FMCG grows by 12.8%; HPC (+13.7%), Foods (+9.0%) Growth broadbased A&P spends higher by 27% PBIT grows by 16.2%

PAT and Net Profit grow by 13.7% and 31.8% respectively EPS grows by 31.4% from Rs. 6.40 to Rs. 8.40 Exports decline by 5.11% Board recommends a Final Dividend of Rs. 3 per share, up from Rs. 2.50 in 2005

DIVISION WISE GROWTH IN 2006

BROAD BASED GROWTH IN HPC (Value Growth %) Soaps and Detergents Laundry Personal Wash

Personal Products

Shampoos Skin Toothpaste

BROAD BASED GROWTH IN FOODS (Value Growth %) Beverages Tea Coffee Ice Cream Salt Processed Food Atta Culinary

SUMMARY - 2006

Good topline growth for the year Substantial Investments behind brands throughout the year Good progress in all HPC categories Food grows well driven by strong growth in processed food and ice cream categories and recovery in tea Cost pressures continued, managed by selective price increases and cost effectiveness programmes

SALES SUMMARY FOR MQ-07

Rs. Crores HPC Foods FMCG Exports Others Continuing Business Discontinued Business Net Sales

MQ’ 07 MQ’ 06 2252 531 2783 352 50 3184 0 3184 2047 432 2479 276 22 2776 22 2798

RESULTS SUMMARY FOR MQ-07

Rs. Crores EBITDA PBIT PBT PAT Exceptional Items Net Profit

MQ’ 07 MQ’ 06 412 379 415 334 59 393 367 333 364 294 149 443

MQ-07 HIGHLIGHTS

Continuing sales grows 14.7% FMCG business grows by 12.3%; HPC (+10.0%) , Foods(+22.9%) A&P spends higher by 17.5% EBITDA up 12.2% ; PBIT grows by 13.7% PAT grows by 13.6%

Net Profit declines 11.2% as base MQ’06 includes profit on account of sale of Nihar brand Exports grow by 27.7% on the back of a growth in HPC, Foods and Specialty ( Non-FMCG) Investment behind brands stepped up

GROWTH % 10 9.6 10.8 16.1 47.9 21.1 20 30 40 50 60 0 SOAPS AND DETERGENTS PERSONAL PRODUCTS BEVERAGES PROCESSED FOODS ICE CREAM

CATEGORY WISE SALES GROWTH :MQ07

All Key HPC categories grow Laundry Shampoo Skin Personal Wash Toothpaste

HPC – CATEGORY PERFORMANCE
Soaps and Detergents Market Shares Steady in Personal Wash; - Lifebuoy and Lux register double digit growth - Lux Pinkful launched in current quarter Market Shares continue to improve in laundry; Category grows in double digits - A good performance by all the brands led by Surf and Wheel

Personal Products Strong all round growth in Shampoo Category; - Clinic all clear returns to strong double digit growth; Sunsilk and Clinic plus continue to grow well - Launch of Scalp oil control boosts sales in Clinic all clear - Sunsilk damage repair and Anti dandruff variant launched Skin Growth Improves - FAL and top end range of Pond’s do well

- Launch of White Beauty Toothpaste Growth led by Close Up; - Strong activation on the Pepsodent 10/10 platform

Foods Topline Tea Coffee Ice Cream Salt Atta Culinary

BUSINEES PERFORMANCE – FOODS
Tea grows well in strong double digits; - All brands grow well Bru Instant leads double digit growth in Coffee Strong growth in Processed Foods portfolio; - Shares improve in Ketchup and Jams - Knorr and Kissan grow in high double digits

Ice Cream continues to perform strongly; - Launch of “Moo Range” of ice creams on the health platform - Distribution extended to Mini metros

MARKET SHARE PERFORMANCE

CATEGORY Laundry Personal wash Hair Skin care Oral Tea

JQ’06 35.3 54.6 48.0 54.3 30.2 25.5

DQ’06 35.8 55.3 48.5 54.7 30.4 24.9

MQ’07 36.4 55.3 46.9 54.8 30.0 23.7

7. LOOKING AHEAD…
FMCG markets expected to grow at current levels High levels of innovation to be sustained and A&P investments to be made competitively and effectively Focus on core foods portfolio to continue Phased implementation programme to commence for the Foods Strategy for the long term

LOOKING AHEAD..

Continued investments in capability building in the area of modern trade and supply chain In the Direct-to-home channel , HLL aims to reach 600 million consumers in 5 lakh villages through 1 lakh entrepreneurs by 2010

THE END

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